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Local bar associations in California and New York have jumped into the legal outsourcing fray by issuing the first public advisory opinions impacting the offshore outsourcing of legal services, known as legal process outsourcing (LPO). The Florida Bar is poised to join the fray by issuing its own advisory opinion later this year and is currently collecting comments from its members.

These opinions specifically or implicitly, react to the rise of LPO in India; and offer guidance to their members on if the they can outsource legal tasks for their clients to foreign attorneys and if so, then how. The opinions uniformly caution their readers to what appears to be extreme due diligence and exercise an ambiguously defined “control” over the outsourcing process.

But to paraphrase the Bar, these opinions are full of sound and fury, and signify not much; at least not much more than sanctioning what attorneys should be doing on a daily basis anyway. If these opinions do anything, they answer the technical question of whether the retaining attorney has to disclose to his client that he’s outsourcing a portion of the legal work the client retained him to do. (Short ethical answer = maybe. Smart business answer = Yes. We’ll leave that issue for another post.)

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For years, Pangea3, and our better colleagues in the legal industry have known that LPO clients, whether in-house counsel or at law firms, focus on and are entitled to total satisfaction, on three keys:

1. U.S. quality or better services

2. Total peace of mind on ethical and legal issues

3. Compelling savings

Quite simply, an LPO can’t achieve these goals by skimping on professional services; and an attorney (or client) who simply wants to go offshore to get bargained basement legal services without so much as lifting a finger will more often than not get what they paid for.

Don’t get me wrong. The LPO industry and Bar members appreciate the recognition by the Bar association. Some of my colleagues would argue that they were long-overdue, in that they mirror what private legal ethicists have said for years – that an admitted attorney may use a non-lawyer to perform support services for her clients if the in-state lawyer otherwise complies with her ethical obligations. Attorneys have used paralegals, contract attorneys, printers, e-Discovery vendors, librarians, and seconded attorneys from clients or their firms for years. Retaining qualified foreign attorneys to do the same work seems like a logical extension.

The skeptic jumps in here and counters that a temp paralegal working in their office and a foreign attorney sitting 8,000 miles away is a whole new galaxy. Perhaps that may have been true twenty years ago, and maybe even ten.

But the distance argument simply can’t hold in the modern legal age where document reviews routinely take place on on-line platforms – accessible and reviewable – from anywhere in the world; or where Lexis and Westlaw compete to put every byte of information known to the legal world online for the world to see (for a fee).

The introduction of cheap, fast and secure broadband communication networks between the world’s financial and legal capitals has revolutionized the way business is transacted.

Corporate legal departments are dispersed across business channels and across continents. Law firms are becoming billion-dollar multinationals because their clients are demanding it. With the advent of extranets, intranets, collaboration portals, desktop video conferencing and jump lines, the time when a lawyer representing sophisticated corporate clients could reasonably expect his client to pay to keep everything within his personal grasp has passed.

It’s amazing that it took this long for it to finally change the way the legal business is transacted as well – in New York, Miami, Los Angeles, Seattle and all points in between.

You don’t have to read a Thomas Friedman book to know that 8,000 miles just isn’t as far as it used to be. That leaves the “foreign” issue, which, in keeping with the opening quote, is the rub.

How do you know that the provider will deliver the reliable work product that you retained them to complete? In choosing a legal outsourcing provider, clients must choose a provider that accomplishes and provides the following:

World Class Quality

o Quality equal to (or in some areas) better than U.S. and European Service Providers.

Peace of Mind

o Address and resolve client concerns about conflicts of interest, practice of law, attorney-client privilege and client confidences and secrets

o Deliver client work in a secure and seamless fashion

o Export control must be addressed (Patent-Specific)

Compelling Savings Significantly lower the cost of processing work for law firms, corporate legal departments and other third parties in the intellectual property life cycle.

o Drive cost-certainty in legal and patent support services.

In short, the determinative factor in outsourcing legal services in an ethically permissible manner is to pick the right LPO provider. That is, the question for an attorney is not if outsourcing legal work to India is permissible, but whether the chosen provider enables the lawyer to satisfy her professional ethical obligations.

For a quick survey of the leaders, laggards and upstarts, check out the following industry-leading studies:

The Black Book Of Outsourcing

Value Notes

Frost & Sullivan

The opinions of the
Los Angeles,
San Diego
and New York City Bar Associations

are lengthy, and well-written. You can also find them posted in the news section of Pangea3.com.
Here are my very brief summaries of the three opinions. (Caveat: this is a personal interpretation of the bar opinions particularly the Los Angeles and San Diego bar opinions; although I am admitted in New York attorney, so I have some more leeway there.)

Los Angeles County Bar Opinion on Legal Outsourcing

Conclusion: A California attorney in a civil case charging an hourly rate may use an out-of-state company (and by implication, an offshore provider) to draft a brief, provided that he satisfies the following conditions:

1. The attorney is competent to review the work;
2. The attorney remains responsible for the final work product
filed with the court;
3. The attorney does not charge an unconscionable fee;
4. Client confidences are protected; AND
5. There is no conflict between the client and the outsourced
provider.

The attorney may have to disclose the outsourcing relationship (both nature and scope) to the client if any of the circumstances below exists:

1. The brief provided is a significant development in
representation; OR
2. The work is a cost which must otherwise be disclosed
to the client under California law.

New York City Bar Opinion on Legal Outsourcing

A New York lawyer may ethically outsource legal support services overseas, to a lawyer or non-lawyer (New York considers all attorneys, who aren’t admitted in New York to be non-attorneys), if ALL of the following conditions are satisfied:

1. The in-state lawyer rigorously supervises the foreign
lawyer/non-lawyer/vendor

a. Obtains background info
b. Conducts Reference checks
c. Interviews foreign lawyers/employees of vendor
d. Regular/periodic communication with the vendor;

2. The in-state lawyer preserves client confidences and secrets;

3. The in-state lawyer avoids conflicts of interest;

4. The in-state lawyer bills the client appropriately
(cost + reasonable overhead allocation); AND

5. Where required, clientç—´ advance informed consent is obtained.

a. Significance of role of foreign lawyers/non-lawyers
b. Whether or not client confidences/secrets must be shared
c. Client expectation (e.g., does client expect that firm alone
will handle the matter)
d. Billing other than cost pass-through

San Diego County Bar Opinion on Legal Outsourcing

Practice of Law: A California attorney did not aid the unauthorized practice of law where she retained full control over the representation of the client and exercised independent judgment in reviewing draft work of the foreign lawyer.

1. This held even where the foreign lawyerç—´ services would
have constituted unauthorized practice of law if provided
directly to an in-state non-lawyer client

2. The foreign lawyer has assisted the in-state lawyer in the
practice of law, not vice-versa and that is permitted

Duty to Disclose to Client: A California lawyer has a duty to disclose the relationship where “the reasonable expectation” of the client is the firm alone will perform the work to develop the legal theories and arguments to be presented to the court.

Duty of Competence: In-state lawyer does not violate its duty to act with competence if he enlists others with expertise and makes sufficient inquiry to determine foreign lawyer’s capability to handle outsourced work:

1. Background Info
2. References
3. Interviews
4. Sample Work Product
5. Communication
6. Review of Ethical Standards

Responsibility for Work: In-state lawyer bears responsibility for all work.

Supervision: Degree of supervision required is magnified with an offshore vendor.

I’ll parse through more of the critical language in these opinions in later posts but the opinions’ dictates are as much grounded in common business sense as they are in practice of law statutes and Model Rules of conduct. How do you know if the attorneys you’re hiring are competent? You review their work, you read their resumes and you ask for references.

For almost all significant legal matters, that’s how corporate clients’ find their attorneys – through reference and procurement processes. While some may be drawn to claims that their attorney will be heavy hitters, most clients are entitled to expect their attorney to make sure they are delivering the best value to them.